Market Commentary by Scott J. Brown, Ph.D., Chief Economist
The House voted to delay the need for a debt ceiling increase by three months, to May 19. Congress has not had a real budget since 2009, funding the government through a series of stopgap measures (Continuing Resolutions). This week, Congress set a goal to have a real budget by April 15th, or lawmakers won’t get paid. Actually, they’ll still get paid eventually.
Oh, and the House and Senate only have to come up with a budget that can be approved by one chamber. They don’t have to have a set of budget bills that can be approved by both chambers (that is, something that could be sent to the president and signed into law). Spending cuts are still slated to kick in on March 1st, with about half of that in defense.It was a very quiet week for economic data. The stock market watched earnings reports. The bond market watched the stock market.
Next week, the economic calendar is packed to the rafters. There are a number of potentially market-moving data releases and there’s a good chance of a surprise or two along the way. The focus is expected to be on the January Employment Report. Forecasting January payrolls is an adventure due to the large seasonal adjustment (we lost 2.6 million jobs before seasonal adjustment a year ago).
A reduced rate of seasonal hiring in November and December should lead to a reduced rate of seasonal layoffs in January, putting some upward pressure on the seasonally adjusted number. This release will also include annual benchmark revision to the payroll data.
In September, the Bureau of Labor Statistics indicated that (based on tax receipts) the March 2012 level of payrolls would likely be raised by about 386,000 (and +453,000 for private-sector payrolls). One should take the reported payroll figure with a grain of salt, but the stock market may use it as an excuse. The initial estimate of fourth quarter GDP growth is expected to be between 1.0% and 1.5%, but these data will be revised, and revised again.
|Last||Last Week||YTD return %|
Consumer Money Rates
|Dollars per British Pound||1.578||1.560|
|Dollars per Euro||1.337||1.302|
|Japanese Yen per Dollar||90.040||77.720|
|Canadian Dollars per Dollar||1.003||1.010|
|Mexican Peso per Dollar||12.652||13.131|
|10-year municipal (TEY)||2.89||3.05|
Treasury Yield Curve – 01/25/2013
S&P Sector Performance (YTD) – 01/25/2013
|Durable Goods Orders (December)
Pending Home Sales Index (December)
|Consumer Confidence (January)|
|Real GDP (1Q13, advance estimate)
FOMC Policy Decision (no Bernanke press briefing)
|Jobless Claims (week ending January 25th)
Employment Cost Index (4Q12)
Personal Income, Spending (December)
Chicago PM Index (January)
|Employment Report (January)
Consumer Sentiment (January)
ISM Manufacturing Index (January)
Motor Vehicle Sales (January)
|Super Bowl XLVII|
|Presidents Day Holiday (markets closed)|
|FOMC Policy Decision, Bernanke Press Briefing|
US government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. US government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the US government.
Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments.
Tax Equiv Muni yields (TEY) assume a 35% tax rate on triple-A rated, tax-exempt insured revenue bonds.
The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Data source: Bloomberg, as of close of business January 24th, 2013.